1923 (5) TMI 2 - HC - Income Tax

Summary

Issues:
1. Interpretation of Section 66 (3) of the Indian Income-tax Act (XI of 1922) regarding the Commissioner's duty to refer questions of law to the High Court.
2. Jurisdiction of the High Court in compelling the Commissioner to state a case for reference to the High Court under Section 66 (3).

Analysis:
The judgment pertains to an application under Section 66 (3) of the Indian Income-tax Act (XI of 1922) where the petitioners sought a statement of their case to be referred to the High Court for decision. The petitioners, a firm of merchants, initially applied to the Commissioner for reference under Section 66(2) based on questions of law arising from an order by the Assistant Commissioner. However, the Commissioner referred the application to the Income-tax Officer, who withheld it, prompting the petitioners to approach the High Court under Section 66(3).

The key contention raised was that the Commissioner's action on the application did not comply with the law, as he failed to dispose of the application himself. The judgment highlighted the provisions of Section 66, emphasizing that the Commissioner must either accept or reject an application for reference on questions of law. It was established that the Commissioner does not possess the authority to delegate this decision to a subordinate officer, as was done in this case. The learned Government Advocate acknowledged the illegality of the Commissioner's procedure.

Regarding the jurisdiction of the High Court, a preliminary objection was raised asserting that the court lacked jurisdiction since the Commissioner had not made any orders or refused to state the case based on the absence of a legal question. However, the judgment rejected this argument, asserting that any refusal by the Commissioner to state the case, regardless of the grounds, equates to a denial based on the absence of a legal question. The judgment emphasized that the High Court has the power to compel the Commissioner to state the case and make a reference if it disagrees with the Commissioner's decision.

Consequently, the judgment directed that the case be remitted to the Commissioner with instructions to act in accordance with the law. The Commissioner was mandated to either prepare a statement of the case for High Court reference or reject the petitioner's application explicitly on the basis of no legal question being involved. The judgment underscored the necessity for the Commissioner to adhere to the statutory provisions outlined in Section 66 to ensure a lawful and proper handling of applications for reference on questions of law under the Income-tax Act.